With the losses of oil firms mounting with each passing day, Oil Minister S Jaipal Reddy On Tuesday met Prime Minister Manmohan Singh to push for an early decision on raising diesel and domestic LPG prices.
An empowered group of ministers headed by Finance Minister Pranab Mukherjee, which decides on revising rates of the sensitive products, has not met since June last year even though crude oil prices have spiralled upward by about 50 per cent.
Reddy, who last week met Mukherjee to push for a fuel price hike, today discussed with the Prime Minister the Rs 450 crore (Rs 4.5 billion) per day that state-owned oil firms lose on selling diesel, domestic LPG and kerosene at government-controlled prices, sources in-the-know of the development said.
They said he also apprised the Prime Minister during the 15-minute meeting of the precarious financial state of the state-owned oil firms, who are living off borrowed money in the absence of getting the full price of the fuel they produce.
When contacted, Reddy refused to comment on his meeting.
Sources said the government needs to muster the political will to take the hard decision.
"I am concerned about the increasing under-recoveries (revenue losses) of oil marketing companies.
"Everyday, OMCs are incurring under-recoveries of about Rs 450 crore," Reddy had said last week after meeting Mukherjee.
The EGoM was originally scheduled to meet on May 11,
There was talk of an EGoM -- which comprises representatives of all major allies in the ruling United Progressive Alliance -- meeting on June 9, but the meet was never scheduled for that day.
Reddy said no new date for the EGoM meeting has been fixed yet.
His ministry is pushing for a Rs 3-4 per litre hike in diesel and a Rs 20-25 per cylinder increase in LPG rates.
Also, it is looking at a possible hike in kerosene prices.
State-owned oil firms had last month hiked petrol prices by a steep Rs 5 per litre and are looking another small increase next week.
Petrol prices were freed from government control in June last year and Indian Oil, Bharat Petroleum and Hindustan Petroleum have the freedom to fix retail rates.
Oil companies are losing Rs 14.22 on the sale of every litre of diesel at the current price of Rs 37.75 per litre in Delhi.
In addition, state oil firms lose Rs 27.47 per litre of kerosene and Rs 381.14 per 14.2-kg domestic LPG cylinder.
The three firms may end the fiscal with a revenue loss of Rs 160,568 crore (Rs 1,605.68 billion), at least half of which will have to be met by the government from its Budget.
The rates for the three products were last hiked in June, 2010, when crude was ruling at $72 per barrel. The basket of crude oil India buys averaged $110 a barrel this month.
